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Aging & Independence Services

Nursing home executive sentenced

Washington Times-Herald - 7/5/2018

July 03--A nursing home executive with operations throughout Indiana, including two homes in Daviess County, has been sentenced in federal court for his part of a fraud scheme. U.S. District Court Judge Tanya Walton Pratt sentenced former CEO of American Senior Communities James Burkhart, 53, of Carmel, to 114 months in federal prison in what has been described as a massive fraud, kickback and money laundering conspiracy.

"In spite of receiving a salary of over $1 million, Burkhart abused his official position of trust to steal taxpayer dollars intended to benefit this community's sick, elderly and mentally challenged," said U.S. Attorney for the Southern District of Indiana Josh Minkler. "Because this thief was motivated by nothing other than corruption and greed, we sought a justifiably harsh sentence. Hopefully, the sound of the prison door slamming shut on this 9.5-year sentence will deter other officials from the culture of corruption and greed we see in this district."

Federal agents executed search warrants on Burkhart's home and office and those of several associates in September of 2015, and by October of 2016, a federal grand jury brought indictments against him and three other people. Burkhart pleaded guilty to three federal felonies: conspiracy to commit fraud, conspiracy to violate the health care anti-kickback statute and money laundering.

Other people charged in the case included American Senior Communities Chief Operating Officer Daniel Benson, Burkhart's friend Steven Ganote and Burkhart's younger brother, Joshua Burkhart. Federal officials say that altogether the men funneled nearly $19.5 million in fraud and kickbacks to themselves through a web of shell companies. The majority of the money they stole came from the Health & Hospital Corporation of Marion County, part of Indiana's public health system and the operator of health care facilities like Eskenazi Hospital.

"This defendant was paid a large salary and viewed as an industry leader, but he chose to abuse his power and position out of pure greed," said Grant Mendenhall, special agent in charge of the FBI's Indianapolis Division. "The FBI works diligently with partner agencies to uncover and investigate corporate executives who enrich themselves through kickbacks and theft. We applaud the concerned citizen who brought this fraud to our attention, and we encourage anyone else who wants to bring these types of fraudulent behavior to light to contact us."

American Senior Communities is the largest nursing home operator in Indiana. Its facilities include Prairie Village and Eastgate Manor in Washington, The Timbers of Jasper, Willowdale Village in Dale and Good Samaritan Home and Rehabilitation Center in Oakland City.

Authorities say Burkhart used his leverage as the CEO of the state's largest nursing home operation to run a six-year scheme where vendors could do business with the company as long as they paid something back. In some cases, Burkhart had vendors inflate their bills and then they would kick-back the overage to Burkhart and his co-conspirators. In others, he formed shell companies that would inflate vendors' bills and submit them as if the shell company was the real vendor. In still other cases he had vendors submit completely false bills that were never provided. And finally, in some cases, he simply demanded kickbacks so that vendors could do business with him. This last category included home health and hospice care, where Burkhart received a kickback for each patient ASC referred to Burkhart's chosen home health or hospice company. The deals covered everything from American flags and air fresheners to furniture and pharmacy services.

He was caught on tape telling an informant, in reference to one of the schemes that netted him over $600,000 per year, "I ain't givin' that up. . . . It doesn't sound like much money, but it's money." Over the six years, Burkhart used the money he stole to buy lakefront real estate on Lake Wawasee, golf vacations, trips to Las Vegas, political contributions, diamond jewelry, gold coins and gold bars. In addition, Burkhart spent over $1.5 million of other people's money on over 150 flights on private jets.

As Burkhart told the informant, "I'll get mine, I always told ya, I'll get mine one way or another." That was true until 2015 when a vendor Burkhart tried to ensnare went to the FBI. Burkhart and his co-conspirators had asked the vendor to inflate his bills by 30 percent and pay the overage to a shell company. The vendor thought that did not sound right or ethical, so he reported it to law enforcement. What followed was an extensive investigation involving multiple undercover informants, search warrants and a detailed analysis of numerous shell companies and nearly 100 bank accounts -- all of which culminated in the indictments, guilty pleas, and ultimately, the sentencing of Burkhart.

The investigation into the case included the FBI, IRS and Indiana's department of health and human services.

David Talcott, acting special agent in charge of IRS criminal investigation's at Chicago Field Office said, "Burkhart's theft from the most vulnerable citizens of our communities is sickening. Taxpayers deserve honesty and integrity from business leaders. IRS-CI's thoroughness of the financial investigation represents our commitment to protect the taxpayers of this community."

"Health Care Fraud is fueled by greed and is perpetrated by criminals with the intent of concealing their acts and securing financial riches at the expense of taxpayers", said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General. "Mr. Burkhart spun a web of deceit through side deals, inflated invoices and shell companies in order to pilfer funds from Medicare and Medicaid which ultimately led him to the doorstep of law enforcement and prosecutorial authorities. The OIG will continue to work with our federal, state and local law enforcement partners to uncover these schemes and hold those who execute them accountable."

Besides the jail time, Burkhart will be required to pay full restitution. Authorities say gold coins and gold bars seized at his home have already been forfeited.

During his sentencing hearing, Burkhart told the judge he was sorry and asked for mercy. "I stand before you a destroyed and broken man," he said. "Good people can do bad things and bad things can destroy the good they've done," he said.

Pratt though pointed out that Burkhart did not make just one bad decision. He made hundreds of them over a six-year period. "He was the CEO of the company and the CEO of the fraud," she said.

Sentencing for Burkhart's co-defendants is set for later this month. Benson is set for July 6, Ganote and Joshua Burkhart for July 9 and David Mazanowski for July 10.